Montréal, Québec – Quebecor Inc. (“Quebecor” or “the Corporation”) today reported its consolidated financial results for the first quarter of 2018 and announced a 100% increase in its quarterly dividend, in accordance with the policy established by the Board of Directors. Quebecor consolidates the financial results of its Quebecor Media Inc. (“Quebecor Media”) subsidiary, in which it holds an 81.53% interest.
As described under “Changes in Accounting Policies” below, on January 1, 2018 the Corporation adopted on a fully retroactive basis the new rules in IFRS 15, Revenue from Contracts with Customers. Accordingly, comparative data have been restated to reflect the impact of the new rules. The Corporation has also reviewed the nature and definition of its key performance indicators. As a result, average monthly revenue per user (“ARPU”) has been abandoned and replaced by average billing per unit (“ABPU”).
First quarter 2018
- Revenues: $1.01 billion, up $5.2 million (0.5%) from the first quarter of 2017.
- Adjusted operating income: $407.4 million, up $35.5 million (9.5%). Excluding the impact of IFRS 15, adjusted operating income was $414.8 million in the first quarter of 2018, a $49.7 million (13.6%) increase.
- Net income attributable to shareholders: $56.7 million ($0.24 per basic share) in the first quarter of 2018, compared with $3.9 million ($0.02 per basic share) in the same period of 2017, a favourable variance of $52.8 million ($0.22 per basic share), including the $44.5 million favourable impact of losses on embedded derivatives related to convertible debentures.
- Adjusted income from continuing operating activities: $89.6 million ($0.38 per basic share) in the first quarter of 2018, compared with $74.9 million ($0.31 per basic share) in the same period of 2017, an increase of $14.7 million ($0.07 per basic share) or 19.6%. Excluding the impact of IFRS 15, adjusted income from continuing operating income was $94.0 million, a $23.2 million (32.8%) increase.
- Quarterly dividend on the Corporation’s Class A Multiple Voting Shares (“Class A Shares”) and Class B Subordinate Voting Shares (“Class B Shares”) increased by 100% from $0.0275 to $0.055 per share.
- Telecommunications segment grew its revenues by $18.4 million (2.3%) and its adjusted operating income by $26.6 million (6.9%) in the first quarter of 2018. Excluding the impact of IFRS 15, segment adjusted operating income was up $40.8 million (10.8%).
- Videotron Ltd. (“Videotron”) significantly increased its revenues from mobile telephony ($14.7 million or 13.2%), Internet access ($11.1 million or 4.4%) and the Club illico over-the-top video service (“Club illico”) ($2.1 million or 23.3%) in the first quarter of 2018.
- Videotron’s total ABPU was $48.82 in the first quarter of 2018 compared with $47.41 in the same period of 2017, a $1.41 (3.0%) increase. Mobile ABPU was $53.25 in the first quarter of 2018 compared with $52.64 in the same period of 2017; the $0.61 (1.2%) increase largely reflects the impact of “bring your own device” plans.
- Net increase of 19,300 RGUs (0.3%) in the first quarter of 2018, including 23,300 connections to the mobile telephony service, 21,800 Club illico subscriptions and 8,100 subscriptions to the cable Internet access service.
- On May 1, 2018, TVA Group Inc. (“TVA Group”) signed an agreement to acquire the companies in the Serdy Média Inc. (“Serdy Média”) group, which owns and operates the Évasion and Zeste specialty channels, plus the companies in the Serdy Video Inc. (“Serdy Video”) group, for a total consideration of $24.0 million. The acquisition is subject to approval by the Canadian Radio-television and Telecommunications Commission.
The Telecommunications segment was the main profitability driver for Quebecor in the first quarter of 2018. It made a strong contribution to the healthy increases in the Corporation’s adjusted operating income and adjusted income from continuing operating activities. Once again, Videotron’s numbers were boosted by its high-growth products and services, including mobile telephony and Internet access. To maintain its lead over the competition, the Corporation continued making investments, including spending on its Internet Protocol television project, based on the XFINITY X1 platform developed by our partner, Comcast Corporation. This forward-looking project will eventually provide our customers with the best television anywhere and equip Quebecor Media with a powerful convergence tool to support enhancement of its content.
During the 12-month period ended March 31, 2018, the number of subscriber connections to Videotron’s mobile telephony service increased by 126,400 or 13.7%, noted Manon Brouillette, President and Chief Executive Officer of Videotron.
During the same period, Videotron added 46,500 subscribers (2.9%) to its cable Internet access service. We remain the only telecommunications provider to offer services of such speed and power across so large a portion of Québec’s territory, thanks to our hybrid fibre network.
The Club illico service also posted significant gains. The 58,900 (18.2%) subscriber increase in the last 12 months attests to the positive consumer response to Club illico’s diverse, high-quality offerings.
Club illico and Quebecor Content renewed their commitment to original Québec film production with the development and production of at least three feature films. Our ultimate objective is to quickly bring this new content to all of the group’s platforms, including premieres on Club illico, added Manon Brouillette.
Videotron was recently ranked the most respected telecommunications provider in Québec for the 13th consecutive year by the 2018 Léger – NATIONAL Reputation survey and scored as Québec’s most influential telecommunications brand on the 2018 Ipsos-Infopresse index, Manon Brouillette concluded.
In the Media segment, the specialty channels, including TVA Sports, film production and audiovisual services and magazines were responsible for the $2.9 million favourable variance in TVA Group’s adjusted operating income in the first quarter of 2018, said France Lauzière, President and Chief Executive Officer of TVA Group.
In another move to address the interests of Québec viewers with diverse, high-quality programming, TVA Sports will be the official Québec French-language broadcaster of the Euro 2020 soccer tournament.
At the beginning of May 2018, TVA Group announced an agreement to acquire the companies in the Serdy Média and Serdy Video group in order to add the Évasion and Zeste specialty channels to its stable. The acquisition is consistent with TVA Group’s content diversification strategy.
We are confident that incorporating these two respected brands into our group should enable them to reach more consumers across all platforms and give them additional resources to drive their growth, said France Lauzière.
The Film Production and Audiovisual Services segment’s quarterly financial results showed year-over-year improvement for the fourth consecutive quarter. With the acquisition of the assets of Mobilimage inc. in January 2018, we have added mobile units and production equipment to our rental services, as well as related technical expertise. It is also noteworthy that Mels Studios and Postproduction G.P. (“MELS”) won two prestigious Canadian Screen Awards in March 2018, Achievement in Visual Effects and Achievement in Overall Sound, testimony to the creative spirit of MELS’ employees and associates, and the respect they have earned in the film industry.
In the Sports and Entertainment segment, the Québec Remparts hockey team of the Québec Major Junior Hockey League announced on April 26, 2018 the appointment of Patrick Roy as general manager and coach.
Patrick Roy is a major figure in the history of the National Hockey League and the Québec Remparts and we are very enthusiastic about his return, said Martin Tremblay, Chief Operating Officer of Quebecor Sports and Entertainment Group.
Having him at the helm will help the team maintain its winning tradition.
On the financial front, Quebecor purchased 4,125,800 Class B Shares for a total cash consideration of $98.7 million in the first quarter of 2018, said Jean François Pruneau, Senior Vice President and Chief Financial Officer of Quebecor.
The Corporation also redeemed convertible debentures in the principal amount of $37.5 million for a cash consideration of $71.9 million on April 4, 2018. Repurchases of equity in the form of shares and debentures convertible into shares have therefore totalled more than $170.0 million at fair value since the beginning of 2018, in addition to repurchases totalling more than $260.0 million at fair value in 2017. All these repurchases were made while maintaining the Corporation’s financial flexibility. As well, in view of the Corporation’s current and prospective financial profile, the Board of Directors of Quebecor has examined the dividend policy and has set a dividend target of 30% to 50% of the Corporation’s annual free cash flows, to be achieved gradually by the end of a four-year period. Accordingly, the Board has approved a 100% increase in the quarterly dividend for 2018.
In the first quarter of 2018, Quebecor again posted solid consolidated financial results thanks to the impact of its investing strategies, Pierre Karl Péladeau concluded.
The Corporation remains strongly positioned to create shareholder value.
For more details and to consult definitions of "adjusted operating income", "adjusted income from continuing operating activities", "revenue-generating unit" and "average billing per unit", please refer to the attached PDF file for the complete version of the press release.
Senior Vice President and Chief Financial Officer
Quebecor Inc. and Quebecor Media Inc.
Quebecor Inc. and Quebecor Media Inc.